Boots the Chemist is hoping to strike a deal with the Inland Revenue over its demands for £500,000 in back taxes for the retail chain’s employee bus service, which would finally settle several months of dispute.
David Thompson, Boots’ finance director, who is preparing to meet shareholders at the company’s agm next week, successfully lobbied the government to change the tax status of ‘green commuting’ from a benefit in kind to an exempt service in the last Budget.
But the Revenue ruled that tax relief could not be backdated and is demanding payment from Boots and other companies that have provided employees with services to help them get to work.
A Boots spokesman says the company provided its employees with a bus service for 60 years in an effort to keep cars off the road but admits that very little has changed since the Budget on the issue of paying backdated tax.
‘We are in discussion with the Inland Revenue,’ he explains.
The company is not expecting to avoid the tax bill completely as others have already been forced to pay, but it is understood to be looking to resolve the matter with a mutually acceptable deal.
But Grant Thornton tax expert Mike Warburton says it is unlikely Boots will be able to achieve its goal.
And although the Revenue is sometimes willing to agree on a deal, Warburton doubts that Boots will be able to secure any sort of concession given the high-profile nature of its lobbying.
‘Deals are done behind closed doors and this is less likely given the publicity surrounding Boots. If other companies were to find out about a deal they would demand similar treatment,’ he says.
The only deal that the company might be able to secure is an agreement with the Revenue that Boots will foot the bill rather than its employees, who are liable under benefit in kind rules.
Thompson, a chartered accountant and a non-executive director of Cadbury Schweppes, has been with Boots since 1966 and the company’s finance director since 1990. Both he and the company will be hoping that an agreement can be reached soon.
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